Everything You Need to Know About the FDIC
You have probably heard of the FDIC before, but chances are you don’t know all there is to know about it. The more you learn about this topic, the better off you will be when it comes to taking advantage of banking-related services later on. In this article, you will learn everything you need to know about the FDIC.
What is the FDIC?
A lot of people wonder what is the FDIC? and it’s a perfectly valid question. The FDIC, also known as the Federal Deposit Insurance Corporation, is responsible for maintaining trust in the entire financial system for the U.S. by insuring all deposits that are made in banks. It insures deposits as big as $250,000. The FDIC does this by assessing potential risks to the funds and taking care of them when necessary. This agency is an independent part of the federal government.
Accounts That Are Covered by the FDIC
You will find that most types of banking accounts are covered by the FDIC, including savings accounts, checking accounts, IRAs, Certificates of Deposits or CDs, and money market accounts. It is important to keep in mind that the FDIC does not insure funds for stocks, annuities or mutual funds. Any type of investment product is not going to be backed by this agency in any way.
How the FDIC Helps You
The FDIC will insure the money you have in your account if your bank experiences any serious problems. This guarantees that you won’t need to worry about anything happening to your funds under any circumstances, as long as your deposits do not exceed the maximum amount of $250,000. This instills trust and confidence in the financial system on an individual and public level.
How It Works
In the event that a bank happens to fail, the FDIC will pay the owner of the account the money they lose. There is a very large insurance fund that exists for the sole purpose of covering losses that result from bank failures. All of the money in this fund is from the insured banks across the country, as well as the money that the fund produces. American taxpayers do not contribute anything to the FDIC fund, but it could one day require taxpayer money in the situation was dire enough.
Each bank pays the FDIC a monthly premium that contributes to the fund so there is enough money in it to cover any losses. Because so many banks give money to the fund, the overall cost associated with a bank failing isn’t quite devastating. It is completely self-funded, but at the same time, it is widely regarded as being backed by the government.
The FDIC is an extremely important part of America’s financial system, and it’s important that you learn at least the basics. This corporation’s fund is essentially responsible for protecting all of the money in your account in the event that your bank goes under for any reason whatsoever.